Key Topic – Other Trade Agreements and Negotiations
It is estimated that by 2030, two-thirds of the world’s middle class will live in Asia. The United States currently has trade agreements with only two countries in Asia — South Korea and Singapore. This could become problematic if the Regional Comprehensive Economic Partnership agreement moves forward as expected. China is at the center of RCEP, which also includes Japan, South Korea, Australia, New Zealand, India and the 10 member countries of the Association of Southeast Asian Nations. If RCEP is ratified, Asia’s largest regional trade agreement will not include the United States.
Australia and China now have a free trade agreement that will eliminate tariffs (currently 12% on chilled/frozen beef) on Australian beef over a period of nine years – similar to the terms of the FTA China has in place with New Zealand. The FTA took effect in December 2015 with an initial round of tariff reductions. Additional tariff reductions are implemented on Jan. 1 of each year, until reaching zero.
South Korea has entered free trade agreements with Australia, Canada and New Zealand. The FTA with Australia came into force Dec. 12, 2014, the FTA with Canada took effect Jan. 1, 2015, and the FTA with New Zealand took effect in December 2015. The tariff reduction schedules for beef and pork are similar to those included in the Korea-U.S. FTA. There are no “catch-up” provisions, however, so the U.S. will retain a tariff rate advantage over Australia, Canada and New Zealand until these countries’ products reach zero duty.